Commentary

By Lars Jensen

The latest El Niño led to significant capacity restrictions in shipping through the Panama Canal.

The entire shipping industry, and most certainly shippers needing to get cargo moved, is yearning for some semblance of stability and predictability to return. If that is the message you seek, you should not read further.

While all eyes are on the Strait of Hormuz and the Red Sea with their inevitable domino effects, it is prudent to look deeper into another potential issue: the Panama Canal. No, not from the geopolitical perspective; that Panama is presently squeezed between US and Chinese interests is an uncertainty unto itself.

The US National Oceanic and Atmospheric Administration( NOAA) issues a monthly outlook for the El Niño / La Niña weather phenomenon. These are shifting weather patterns occurring in the Pacific, and among their many effects, they impact rainfall in Panama.

An El Niño pattern, specifically, can reduce rainfall in Panama, which in turn impacts the water level in Lake Gatun in central Panama. This is the water basin used to operate the locks in the Panama Canal. If the water level drops too low, vessels face restrictions when crossing the canal.

The water level in Lake Gatun generally varies between 85 and 88 feet. The most recent El Niño was in 2023 – 24, and it was categorized as“ strong.” This led to Lake Gatun water level dropping to 79.2 feet— the third-lowest recorded since 1965, when measurements began— and significant capacity restrictions in shipping through the canal.

NOAA designates each El Niño as“ weak,”“ moderate” or“ strong” depending on intensity. We saw a“ weak” El Niño in 2018 – 20, yet Lake Gatun still dropped below 80 feet, although for a considerably shorter period than in 2023 – 24. The one before that was a“ very strong” El Niño in 2015 – 16 that had water levels drop almost to 78 feet, the lowest level ever recorded.

There were five“ weak” or“ moderate” El Niño periods from 1999 to 2015, all with limited impact on the canal water level. Prior to that, 1997 – 98 was a“ very strong” El Niño, leading to water levels dropping to 78.5 feet, the secondlowest ever recorded.

The historical data is quite clear. A“ strong” or“ very strong” El Niño tends to result in a significant decline in Lake Gatun water levels. A weaker El Niño might at times do that, but usually not.

On April 9, the outlook from NOAA noted a 61 % chance of El Niño emerging this May – July and persisting until at least the end of 2026. NOAA also predicted a 51 % chance by year-end that it will be either“ strong” or“ very strong,” with equal risk between the two.

This means that, based on the current weather models, there is essentially a 50-50 risk that by the end of the year we will have an El Niño pattern of a magnitude likely to reduce the water levels in Lake Gatun significantly. With this comes the risk of renewed, albeit temporary, capacity restrictions through the canal.

Weather forecasts are, by nature, probabilistic, and no one can give a certain prediction. Instead, shippers depending on cargo flows through the Panama Canal might at this time contemplate whether they should ignore this risk, plan contingency measures or look at possible changes to the current supply chain setup.

email: lars. jensen @ vespucci-maritime. com

NOAA has forecast a 51 % chance of a“ strong” or“ very strong” El Niño in 2026. NOAA

68 Journal of Commerce | May 4, 2026 www. joc. com